How to retire a billionaire

By

Mary Kate Miller

January 8, 2018

Photo credit:

You read that right, billionaire -- with a B.

We know. Retirement savings doesn’t always feel like the most exciting topic. If you’re younger, it feels far away; if you’re older, it feels too urgent to consider nuances. The truth is that most Americans aren’t saving enough for retirement. We’re not here to judge. We’re just here to give you the tools you need to knock it out of the park when it comes to retirement savings so that one day you can retire like a millionaire or maybe even a billionaire

Who says that you have to change your life and your spending habits once you reach retirement? If you save enough — and save smart— then you can be living the high life in retirement. You might even find that if you follow these tips, retirement may come sooner than you expected.

Take the free money from your employer

It’s the advice you’ll hear over and over again, but if your employer has a matching program for their 401(k), take advantage of it. Full stop: Get that free money. If your employer matches what you contribute to your 401(k) dollar for dollar, then you’ve immediately doubled your contributions and growth. You won’t find any other type of investment that immediately doubles. Even if your employer only matches $.25-.50 on the dollar, that’s still free money. Take advantage of that.

Have an individual retirement account

In addition to your 401(k), Individual Retirement Accounts (IRAs) are key towards saving and building wealth for retirement. There are a few different types of IRAs. A traditional IRA allows you to invest money similar to a 401(k) in that you can invest money pre-tax. Unlike a 401(k), you don’t need to be part of an employer-backed program. You can invest on your own— up to $5,500 in 2018.

Roth IRAs are similar in the “go your own way” approach, but they’re different in that the money you contribute is post-tax. That means you pay tax when the contributions are made, rather than when they are withdrawn. This makes Roth IRAs an invaluable financial asset for those at the beginning of their career, when you will ostensibly be in a lower tax bracket.

All retirement accounts come with limitations alongside their perks. There may be penalties for withdrawing money too early (for example, with IRAs, you may be penalized for withdrawing before age 59 1/2). For IRAs, there are also income caps. In 2018, you have to make less than $133,000 for single filers and $199,000 for couples filing jointly.

Let your money work for you

There is a common adage that no one has ever gotten rich off their nine-to-five. When you invest the money that you’ve earned, you give yourself the chance to enjoy a higher rate of return on your investment. For most of us, this will be true: We won’t save our way to millions, investment will be key.

Invest in something you care about

Again, we get that saving for retirement can be hard. Investing in something you care about can help. When you care about the companies and the causes you’re supporting, then you feel like your money is out there doing good in the world. That’s why each of our portfolios has been filled with companies working to address a major threat facing the world today. When you put your money into an investment that’s working towards, say, renewable energy, you know that in addition to saving money for retirement, you’re impacting the world for the better.

Automate, automate, automate

Chris Reining set a goal to build a financial portfolio of $1 million and retire by age 35. At age 37, he reached that goal. How did he do it? The IT specialist attributed much of his success to automation. He automated bills, yes. He also automated contributions to all of his investments. This secured his investment portfolio and saved time, which he was able to dedicate to other tasks.

Setting up your investments for automatic contributions can be a key strategy towards stabilizing your retirement. When you have to think about how much money you want to contribute each month, it gets harder to do. You could pretty much always use $50 for something that day or that week. But when you set up your investments for recurring contributions, it happens without you having to think about it— and to be honest, you probably won’t even notice. Out of sight, out of mind, and into a healthy retirement.

Forgive yourself

Time is your best ally when it comes to retirement. The sooner you invest, the more compound interest you’ll accrue. Still, if you’re coming late to the game, don’t beat yourself up. It’s better late than never, and there’s no better day than today to finally open that IRA.

Getting to the billions

So – how much do you have to save and invest to retire with $1 billion? Well...it’s a lot, obviously. Here are the details:

Let’s say that you’re an average American earning a slightly above average salary – $75,000 per year – and you’re all about that debt-free lifestyle. With 45 years to save and a 7.5% return, you’ll only need to save $225 per month. Not too much, right? That’ll get you to $1 million. If you want to be in the 3 Comma Club, you’ll need to sock away and invest $224,000 per month. That’s a bit more than your daily latte, I’m guessing. Keep your goals realistic and attainable – like a cool one million dollar retirement goal.

This website is operated by Swell Investing LLC, an SEC Registered Investment Adviser. Brokerage services provided to clients of Swell Investing LLC by Folio Investments, Inc., an SEC registered broker-dealer and member FINRA/SIPC. Investments: Not FDIC Insured • No Bank Guarantee • May Lose Value. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Please consider your objectives and Swell’s fees before investing. Past performance does not guarantee future results. Investment outcomes and projections are hypothetical in nature. Not an offer, solicitation of an offer, or advice to buy or sell securities in jurisdictions where Swell is not registered. Friede, Gunnar, Timo Busch & Alexander Bassen. "ESG and financial performance: aggregated evidence from more than 2000 empirical studies." Journal of Sustainable Finance & Investment, vol. 5, no. 4, 15 Oct. 2015, pp 210-233. https://doi.org/10.1080/20430795.2015.1118917. "S&P 500" is an abbreviation for the Standard & Poor's 500 Total Return Index, a market-value weighted index of 500 stocks chosen to reflect the risk/return characteristics of the large cap universe and one of the common benchmarks for the US stock market. The MSCI KLD 400 Social Index comprises companies with high Environmental, Social and Governance (ESG) ratings and excludes companies involved in Alcohol, Gambling, Tobacco, Military Weapons, Civilian Firearms, Nuclear Power, Adult Entertainment, and Genetically Modified Organisms (GMO). The Index aims to serve as a benchmark for investors whose objectives include owning companies with very high ESG ratings and avoiding companies that are incompatible with specific values-based criteria. Comparison to the S&P 500 Index and MSCI KLD 400 is shown for illustrative purposes only. Swell's portfolios differ from these benchmarks in that, among other factors, Swell's portfolios are managed, primarily comprised of small and mid cap stocks, are not diversified, bear fees, and may vary materially in volatility. Past performance is not indicative of future results.

The Swell Impact 400 is not a market index, is not based on any market index, and does not track any market index. At inception, the Swell Impact 400 contains 400 securities; however, the number of securities may vary over time based on market conditions, corporate actions, and other factors, including eligibility factors and limitations in security selection and portfolio construction. Any reference to "Impact 400" shall mean the "Swell Impact 400".